TaxTMI 
TaxTMI 
2011 (3) TMI 1232
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....2-03. 2. The appeal was admitted on July 17, 2009 to consider the following substantial question of law for determination by this court : "Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal has grossly erred in denying the claim to the appellant on account of interest received by the appellant being a co-operative society from its members co-operative societies under section 80P(2)(a)(i) of the Income-tax Act ? 3. The facts, in brief, necessary for adjudication as narrated in the appeal are that the appellant-society is an apex body of co-operative societies and district co-operative milk producers unions are its members. The appellant is engaged in the marketing and sale of milk pr....
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....d to as "the CIT(A)"). The assessee chal-lenged the disallowance of deduction under section 80P(2)(d) of the Act. It was also claimed that the interest income from the member co-oper-ative societies was deductible under section 80P(2)(a)(i) of the Act. The Commissioner of Income-tax (Appeals) upholding the assessment order held that deduction under section 80P(2)(d) of the Act was not admis-sible to the assessee. It was further held that the deduction under section 80P(2)(a)(i) of the Act was also not admissible to the assessee. Conse-quently, the assessee's appeal was dismissed vide order dated October 31, 2005. 6. The assessee further took the matter in appeal before the Tribunal and the Tribunal accepted the plea raised on behalf....
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.... heard learned counsel for the parties and have perused the record. 9. The Tribunal while dismissing the appeal of the assessee recorded the following findings of fact in para. Nos. 7 and 8 of the order : "7. In this regard, it is an undisputed fact that the assessee is a co-operative society duly registered under the Punjab Co-operative Societies Act, 1961. It is also a fact that its predominant object is relating to the business of procuring, processing and marketing of milk and milk products of its member co-operative milk unions. The claim of the assessee that it falls within the expression carrying on the business of banking or providing credit facilities is on the strength of bye-law No. 3.2.32 which has been extracted....
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....Primarily the credit facility being provided relates to the outstanding dues to the assessee of the milk unions. In this connection, a reference made by the assessee to the circular issued by the managing director of milkfed which has been reproduced on page 15 of the assessment order is note-worthy. It shows the interest to be charged on the balances of the milk unions outstanding on a particular date in the books of account of the asses-see. The assessee has itself declared the interest on such amounts as from other sources in its computation of income, as specifically noticed by the Assessing Officer at page 17 of his order. In our considered view, the activity of permitting member milk unions, an extended credit facilities to pay the ou....